Feds Announce Recent Actions Against Various Alleged Upfront Fee Foreclosure Rescue Rackets

The Federal Trade Commission recently announced:

• The Federal Trade Commission [] announced a series of law enforcement actions as part of the FTC’s continuing crackdown on scams that target homeowners behind in their mortgage payments or facing foreclosure.

• At the FTC’s request, federal courts have halted two allegedly bogus mortgage relief operations that posed as government mortgage assistance programs, pending trial. In addition, 17 marketers have been banned from selling mortgage loan modification and foreclosure relief services under court judgments and settlements in several previously filed law enforcement actions. The FTC has charged another mortgage relief operation with contempt for violating 2008 court orders.

• All of these cases involved alleged false claims that the defendants can obtain dramatically lower mortgage interest rates in exchange for hefty up-front fees.(1)

For the names of the outfits and individuals targeted by the FTC, and the details underlying its actions against these rackets, see FTC Announces Series of Actions Against Mortgage Relief Operations Charged with Deceiving Distressed Homeowners.

(1) Among the outfits' alleged bad acts are:

• Pocketing upfront fees using false claims of high sucess rates and promises to give full refunds if they failed to obtain loan modifications,
• Misrepresenting that they would stop, postpone, or prevent foreclosure,
• Misrepresenting loan and modification terms,
• Misrepresenting their ability to improve someone’s credit history,
• Advising people to stop making mortgage payments,
• Falsely saying that negotiations with their lenders were under way in response to consumers' inquiries,
• Falsely claiming that a lawyer would negotiate the terms of consumers’ home loans with lenders,
• Falsely claiming that only selected customers meeting certain conditions could “qualify” for modification assistance, when in fact, these rackets pocketed upfront fees from pretty much everyone who applied for help,
• Falsely claiming that it had attorneys and forensic accountants on staff,
• Using mailers that falsely peddled loan modification services as federal programs, and having those mailers signed by an attorney in the consumer’s state,
• Misrepresenting themselves as part of the federal government,
• Misrepresenting an affiliation with the federal government,
• Using logos that simulated government seals,
• Falsely claiming to have taken reasonable and appropriate measures to protect consumers’ personal information from unauthorized access,
• Improperly disposing of consumers’ information in unsecured dumpsters,
• Stopped responding to consumers' phone calls or e-mails,
• Disconnecting their businesses' phone numbers,
• Changing the name of their business while continuing to make promises and take money from consumers,
• Using mailers that appear tailored to individual recipients, expressing certainty that the consumers could receive a loan modification by stating that consumers had been “PRE-SELECTED” because their loan situation met the defendants’ criteria, and specifying the consumer’s “New 30 Year Fixed Payment.”